monetary_policy
Central Bank of Turkey Normalises Liquidity via Repo Auctions Ahead of Expected Q4 Easing
05 Sep 2026
The Central Bank of the Republic of Turkey resumed weekly repo auctions to restore liquidity conditions, pulling the Turkish Lira Reference Rate down from 40% toward its 37% benchmark rate. While a hold is anticipated at the September meeting following modest Q2 GDP expansion of 2.5%, markets are pricing policy rate reductions toward 35% by year-end.
Why it matters
Liquidity normalisation narrows real rate buffers for the Turkish lira as carry trade profitability becomes increasingly sensitive to Middle East energy shocks and domestic inflation trends. Anticipated fourth-quarter rate cuts could amplify downside risks for TRY if energy import costs remain volatile.